Proof of export proceeds through banking channels defeated alleged foreign exchange contravention and rendered penalty unsustainable.

Foreign inward remittance certificates and supporting correspondence were accepted as sufficient proof that export proceeds had been realised through banking channels. The missing GRI numbers on the certificates did not, by itself, discredit the remittances, and an adverse inference based only on routing through a different bank was treated as overly technical. On that factual basis, the alleged contravention of sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973 was not established and the penalty was held unsustainable.

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Issues: Whether the export proceeds were realised through proper banking channels so as to negate contravention of section 18(2) and section 18(3) of the Foreign Exchange Regulation Act, 1973 and render the penalty unsustainable.

Analysis: The appellate record showed that the appellant had produced foreign inward remittance certificates and correspondence indicating receipt of the outstanding amounts. The absence of the GRI numbers on the certificates was treated as insufficient to discredit the remittances when the overall material showed that the export proceeds had been received. The adverse inference drawn merely because the remittances were routed through a different bank was held to be overly technical, and the evidence was accepted as sufficient to establish realisation of the export bills.

Conclusion: The alleged contravention was not established and the penalty could not be sustained; the finding was in favour of the appellant.

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